The law governing commercial rent reviews is changing, with new legislation introducing a ban on upwards-only rent review provisions in qualifying business tenancies in England and Wales.
The English Devolution and Community Empowerment Act 2026 received Royal Assent on 29 April 2026. The relevant provisions are not yet in force and will require further regulations before they take effect. But, what does this mean for commercial landlords and tenants?
What is an upwards-only rent review?
An upwards-only rent review clause means that, when rent is reviewed, it can increase or remain the same but cannot decrease, even if market rents have fallen. These clauses have traditionally provided landlords with greater certainty over rental income and can support property valuations and investment decisions. For tenants, however, they can mean continuing to pay the same or higher rent even when market conditions have changed.
What is changing?
The new legislation will prevent qualifying business tenancies from using rent review provisions that only allow rent to increase or remain unchanged. This does not mean that commercial rent reviews are being abolished. Open market, index-linked and turnover reviews will all still be permitted, but any provisions that attempt to impose an upwards-only review will be deemed to have no effect.
Stepped rents and other fixed uplifts will not be affected, as future rental figures can be determined from the outset.
The key change is that a qualifying rent review mechanism will need to allow for the possibility of a reduction where the relevant calculation produces a lower rent.
Crucially, the new legislation also contains importance anti-avoidance provisions which will grant the tenant a statutory right to trigger rent reviews. This would prevent a landlord from refusing to review the rent in situations where the review could result in a decrease.
What does this mean for landlords and tenants?
For tenants, the changes could provide greater protection when market rents fall. However, a reduction will not be automatic and will depend on the terms of the lease and the rent review mechanism.
For landlords, the changes could create greater uncertainty over future rental income and potentially affect investment returns and property valuations. Landlords may therefore wish to consider alternative ways of structuring rent reviews in new leases.
For example, a stepped rent can provide certainty by agreeing increases in advance, while an index-linked review can link rent to changes in an agreed index. Each approach has different risks and benefits.
Will existing leases be affected?
The ban is not generally retrospective, so existing leases containing upwards-only rent review provisions should remain unaffected. However, there are transitional provisions covering certain new leases and lease renewals, including certain renewal arrangements entered into from 17 March 2026. The position will therefore depend on the circumstances and timing of the particular lease.
Landlords and tenants should take advice before assuming that an upwards-only provision will continue to apply following a renewal, variation or other change to a lease.
What should you do now?
Although the ban is not yet in force, landlords and tenants should consider reviewing their commercial leases now. Landlords should identify leases containing upwards-only provisions and consider any upcoming rent reviews or renewals, whilst also assessing their long-term income projections. Tenants should also review their existing terms and consider how the changes could affect future rent liabilities, particularly in the context of potential renewal. Prospective tenants should also factor the upcoming changes into any live lease negotiations.
The way rent review provisions are drafted and negotiated is likely to become increasingly important as the new regime approaches.
How can Parker Bullen help?
The introduction of a ban on upwards-only rent reviews represents a significant change to the commercial property landscape.
Whether you are a landlord or tenant, Parker Bullen's commercial property team can advise on existing lease terms, upcoming rent reviews, lease renewals and the negotiation of new commercial leases.
If you are approaching a rent review or renewal, or want to understand how the new legislation could affect your commercial property arrangements, contact Parker Bullen for advice.